Ms O' Brien Chanel College Income & Income & Expenditure Expenditure Household Budgeting Household Budgeting
Ms O' Brien Chanel College
Income & Income & ExpenditureExpenditureIncome & Income &
ExpenditureExpenditure
Household BudgetingHousehold BudgetingHousehold BudgetingHousehold Budgeting
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A Budget: is a financial plan that shows expected income and expenditure over a certain time period.
Why budget?......
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1. To ensure money is available to cover costs
2. Reduce risk of impulse buying
3. Avoid build up of debt
4. Money for a ‘rainy day’
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Income:
- is money or a benefit in kind you receive
- 1. Regular 2. Irregular (additional) 3. Benefit-in-Kind
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1. Regular Income:
- Is what you are sure of receiving- You can plan to spend it- E.G. Wages/ Salary/Child Benefit
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2. Irregular Income:
- Is what you are not sure of receiving
- You cannot plan to spend it- E.G. Bonus / Lotto Win
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3. Benefit- in –Kind:
- Non money income received for work done
- Incentive to work hard- Boosts employee morale
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Regular Benefit in Kind Irregular
Wages Overtime Interest Medical Insurance Pension
Salary Lotto win Gift Car Social Welfare Benefit Mobile
Bonus Commission Tax refund Club Membership
Place Incomes under correct headings
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Wages•Is regular income for hours worked or number of goods produced.•E.g. Builder
Salary•Is regular income received for doing a job no matter how many hours you spend at it.•E.g. Teacher * Min wage €6.06
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Types of Employee Income
1. Time Rate: Getting paid per hours worked.2. Piece Rate: Getting paid per number of
products produced. Which would you prefer?....
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3. Commission•Additional income calculated as a percentage of sales.•Eg.•Mary earns 5% commission on every euro worth of clothes she sells.•How much does she earn for selling 200 euro worth?
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• 200 X 5 100
= €10
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4. Basic wage
- Regular weekly payment for normal hours worked.-Eg. €10 x 30 hrs = €300
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5. Overtime
• Additional payment for working over your normal hours.
Eg.• Time and a half. €10 + 1/2 = €15
per/hr• Double time. €10 x 2 = €20 per/hr• Treble time. €10 x 3 = €30 per/hr
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Example
• Mary receives €20/hr for a normal 30 hour week and double time for overtime.
• How much does she earn for a 32 hour week?
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Answer
• Basic Pay= 30 x € 20 = €600• Overtime = 2 x (€20 x 2) = € 80• Total €680
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Gross Wage
Basic Wage + Overtime before deductions
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Net Wage (Take Home Pay)
Basic pay + overtime after deductions
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Deductions:Voluntary (Choice) Involuntary
(Compulsory)
Pension PAYE
Medical Insurance PRSI
Savings Universal Social Contribution
Trade Union Fees
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Statutory Deductions:•PAYE – Pay as you Earn
-32800@20% - Anything over @ 41% - Used by government to invest in services e.g. Health Care
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PRSI: Pay Related Social Insurance-Collected as a contribution by the employee towards social welfare benefits-E.G Old age Pension, Unemployment benefit
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Basic Basic hourly wage €10 Per HourNo of hours worked 6 HoursTotal wages receivedOver time Basic wage plus time and a halfNo of hours worked 3 HoursTotal Overtime wages receivedGross wage
Wage slip
Basic hourly wage: is what you get for every hour worked
Overtime: is what you receive for any extra hours you work
SolutionBasic
Basic hourly wage €10 Per Hour
No of hours worked 6 Hours
Total wages received 10 x 6 = €60
Over time
Basic wage plus time and a half
10/2 = 510+5 = €15 Per Hour
No of hours worked 3 Hours
Total Overtime wages received
15 x 3 = €45
Gross wage €60 + €45 = €105
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Jan Feb Mar April May June Total
Joe 2300 2300 2600 2550 2300 2300
Mary 2800 2800 2800 3600 2800 2800
Child Ben
240 240 240 240 240 240
Interest
- - - - - 560
Total Income
Workbook pg 2 Q10
Expenditure
Fixed: Spending money on goods and servicesregularly. Amount does not vary.
Irregular: Spending money on goods and servicesregularly But the amount spent varies.
Discretionary: Spending money on things we wantbut do not need
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ExpenditureFixed Irregular Discretionary
Rent Car running costs Presents
Mortgage Phone bills Holiday
Insurance Groceries Entertainment
Clothes Magazine
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Current Expenditure: Spending money on day-to-day items
Capital Expenditure: Spending money on durable items for long term usage
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Opportunity Cost
The item we do without when we have to make a choice between two or more actions
Opportunity CostYou have €50 to spend .
You can buy a ticket to go and see a or you can buy 5 video games.
What is your decision?
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Impulse Buying
“Buying without thinking”
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False Economy
Buying something because it is cheap but in the long run costs
you more
She only cost a euro dad and she is going to
have puppies!
False Economy
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Reading Electricity Bills
Present 6734
Previous 5890
No of units used 844
Rate per unit .20
Sub total 168.80
Standing charge 10.00
Total charge 178.80
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E.G. Question ESB Meter Reading
Present 6534Previous -4850No of units usedRate per unit X.30Sub totalAdd Standing charge
+15.00
Total charge
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Present 3436Previous 2916No of units usedRate per unit .15
Sub totalAdd Standing charge
16.20
SubtotalVat @13.5%Total owed
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Present Previous
Quantity and Price
Description of charges Total Amounts
3436 2916 X @ €0.15
General Units €
60 days @ €0.25
Standing Charge €15.00
Subtotal €
Vat @ 13.5% €
Total €Billing Period Pay by Total now due
14 Jul 11- 18 Sept 11
18 Oct 11 €
Example 3. Electricity Bill
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Present Previous
Quantity and Price
Description of charges Total Amounts
10350 9240 X @ €0.02
General Units
Standing Charge €20.00
Public Levy €0.00
Vat @ 10%
Billing Period Pay by Total now due
14 Aug 11- 18 Oct 11
12 Nov 11
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Net CashTotal Income – Total Expenditure
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Opening CashMoney available at the start of the month
(Brought forward from the previous month)
Money in bank
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Closing CashNet Cash + Opening Cash
Money left over at the end of the month Surplus Deficit
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Sept Oct Nov Total
Net Cash 300 300 500
Opening Cash
200
Closing Cash
800 1300